Mauritius: Actual and presumed foreign tax may be aggregated under pooling method (Supreme Court decision)

The Supreme Court of Mauritius held that actual foreign tax and presumed foreign tax may be aggregated for purposes of the pooling method under the Income Tax (Foreign Tax Credit) Regulations 1996.

Summary

The taxpayer holds a global business license and derives foreign income from two sources, namely dividend income and non-dividend income. For the tax years 2013 and 2016/2017, the taxpayer applied the pooling method under the Income Tax (Foreign Tax Credit) Regulations 1996 and aggregated:

• Actual foreign tax paid on dividend income
• An 80% presumed foreign tax credit (FTC) on non-dividend income

The Mauritius Revenue Authority (MRA) denied this treatment, arguing that under the pooling method, the FTC claim must be based on either actual foreign tax or presumed FTC, but not both. The taxpayer appealed to the Assessment Review Committee (ARC), and the ARC upheld the MRA's view, ruling that under the pooling basis, all foreign income must be treated as a single aggregate and subject to either proved tax or presumed tax, but not a combination of both.

The taxpayer disagreed with the ARC's decision and appealed to the Supreme Court, which overturned that decision and held that the Income Tax (Foreign Tax Credit) Regulations 1996 do not clearly prevent the combination of actual and presumed foreign tax under the pooling method.

KPMG observations

• Under the pooling method, foreign tax may be calculated by combining all foreign income, subject to the overall limit that the FTC cannot exceed the Mauritius tax payable.
• The Supreme Court confirmed that, when the law is unclear, it must be interpreted in favor of the taxpayer and that the rules do not require a taxpayer to choose exclusively between actual and presumed foreign tax when applying the pooling method.

Read an April 2026 report prepared by the KPMG member firm in Mauritius